“Evercore: Bearish Fears for Apple Overblown”
Source: Davit Kirakosyan
Evercore ISI Reaffirms Outperform Rating on Apple Amid Bearish Market Sentiment
In a recent report, Evercore ISI analysts reaffirmed their Outperform rating on Apple (NASDAQ:AAPL) with a $250 price target, expressing optimism despite the prevailing bearish market sentiment. The analysts believe that Apple is well-positioned to meet current targets amid existing market dynamics, increasing the likelihood that the stock may outperform market expectations.
Despite the general pessimism in the market, especially with the buyside expectations being currently below consensus estimates, the analysts remain confident in Apple’s potential. They argue that Apple, known for its innovative and leading-edge products, is primed to meet and potentially exceed its targets, which could result in a surging stock price.
Fears Over Apple’s Position in the Chinese Market Deemed Overblown
One of the central concerns among investors has been Apple’s standing in the competitive Chinese smartphone market. However, Evercore ISI analysts view these concerns as overstated. They point to potential demand growth in emerging markets and a robust U.S. upgrade cycle, which is partly fueled by advancements in Artificial Intelligence (AI).
Furthermore, while Huawei remains a formidable competitor in China, they are currently grappling with significant supply chain issues that limit their capability to challenge Apple’s higher-end models. To add to this, the anticipated government stimulus in China is expected to provide a much-needed boost to smartphone demand across the industry, further strengthening Apple’s position.
Positive Impact of Staggered AI Rollout
The analysts also highlight the potential benefits of a staggered AI rollout. They expect this strategy to extend the iPhone’s upgrade cycle, attracting new users as features are progressively released in various regions. This approach could give Apple a strategic advantage by ensuring a steady stream of new customers, despite the competitive nature of the smartphone industry.
Analysts Bullish on Apple’s Wearables and Services
Evercore ISI analysts are not only optimistic about the future of iPhone but also bullish on Apple’s Wearables and Services sectors. They believe that the launch of new products such as the Watch Ultra, AirPods 4, and USB-C AirPods Max will likely drive growth in the wearables segment in the December quarter.
While gross margins could potentially benefit from a favorable iPhone mix, a decrease in Services revenue may offset some of these gains. Nonetheless, the analysts anticipate that the positive impacts will outweigh the negatives, leading to a strong performance for Apple in the upcoming quarters.
Apple Expected to Exceed Market Expectations
Despite the bearish sentiment surrounding the market at large, Evercore ISI analysts maintain that Apple is poised to exceed the relatively low market expectations for the September quarter. They also predict that the tech giant will deliver a strong outlook for the December quarter, further solidifying their positive stance on Apple’s stock.
In conclusion, Evercore ISI’s reaffirmation of an Outperform rating on Apple reflects a strong confidence in the company’s capabilities and market position. Despite numerous challenges, including competitive pressure and unpredictable market conditions, Apple’s innovative strategies and robust product lineup position it for sustained growth and success.